NEW YORK, Jan. 10, 2013 (GLOBE NEWSWIRE) -- The law firm Gardy & Notis, LLP announces that on January 4, 2013, the United States Court of Appeals for the First Circuit reinstated shareholder derivative claims filed in the United States District Court for the District of Puerto Rico relating to UBS closed-end funds in Puerto Rico, including: Puerto Rico Fixed Income Fund II, Inc., Puerto Rico Fixed Income Fund III, Inc., Puerto Rico Fixed Income Fund IV, Inc., and the Tax-Free Puerto Rico Fund II, Inc. (the "Funds").
The case is Union de Empleados de Muelles de Puerto Rico PRSSA Welfare Plan, et al. v. UBS Financial Services Incorporated of Puerto Rico, et al., No. 10-cv-1141 (ADC), filed in the United States District Court for the District of Puerto Rico. For more information about this lawsuit, or to obtain a copy of any court filings, or if you are an investor in one of the UBS closed-end funds, please contact Mark Gardy at Gardy & Notis, LLP at 212-905-0509 or mgardy@gardylaw.com.
Gardy & Notis LLP is co-lead counsel for plaintiff shareholders. The defendants are UBS Financial Services Incorporated of Puerto Rico, UBS Trust Company of Puerto Rico, and the members of the Funds' board of directors. The complaint alleges that that defendants seized upon unique aspects of the Puerto Rico financial markets to craft a scheme that allowed them to wrongfully garner millions of dollars in fees for the UBS defendants, who operated on all sides of the transactions and manipulated the Funds and the bond market to the detriment of the Funds and their unsuspecting investors.
In 2008, UBS Financial Services Incorporated of Puerto Rico underwrote $2.9 billion of bonds issued by Puerto Rico's troubled Employee Retirement System, a public retirement system maintained by the government of Puerto Rico. Subsequently, UBS Trust, an affiliate of UBS Financial, purchased approximately $1.5 billion worth of the bonds, selling approximately $757 million of the bonds to the Funds while serving as the Funds' investment adviser and administrator. As a result, the bonds accounted for more than thirty percent of the Funds' assets. The Funds were so heavily invested in the bonds that they suffered substantial losses when the value of the bonds soon depreciated. UBS Financial, however, shared in underwriters' fees of $27 million for its role in bringing the bonds to market, while UBS Trust garnered millions in fees for managing the Funds.
The Court of Appeals found that plaintiffs raised a reasonable doubt as to the independence and disinterest of the majority of the Funds' directors and that presuit demand was therefore not required as the board may not have been acting in the Funds' best interests. The Court of Appeals found that the District Court erred in reaching a contrary conclusion, and that the derivative claims should not have been dismissed.
For more information about this lawsuit, or to obtain a copy of any court filings or if you are an investor in one of the UBS closed-end funds, please contact Mark Gardy at Gardy & Notis, LLP at 212-905-0509 or mgardy@gardylaw.com. You can also obtain more information by visiting our website at www.gardylaw.com.